Competitive Positioning

Question 1

Who-What-How Framework

Answer 1

Business-level strategy:
What business the company is in
Who will be its targeted customers
What products or services will it offer
How will it go about achieving all these, the type of activities

Question 2

What is differentiation

Answer 2

Differentiation - aims at creating value mainly through increasing willingness to pay, thereby increasing prices & margins

Drivers:

• Enhancing product features
• Customer Service
• Including complements

Consider the benefits of differentiation from angles of 5 forces

Question 3

Risks of differentiation

Answer 3

Focus of competition may be on lowering cost instead of creating a more unique product

Cost has increased but perceived value remained

Uniqueness is not captured/ perceived

Question 4

What is cost leadership

Answer 4

Aims at creating value with decreasing costs, allowing margins and value created to expand

Usually require a freak

Drivers

• Cost of input factors
• Economies of scale, unit cost decreases as production increases
• Learning curve effects - lesser time for the same output
• Experience curve - alter underlying technology, via process innovation
• Cube-square rule - volume increases faster than surface area increments

Question 5

Risk of cost leadership

Answer 5

New entrants with new expertise, with greater innovations - cost leadership is compromised with new technology

Question 6

What is blue ocean strategy

Answer 6

Mix of both differentiation and cost leadership, further amplifying value creation, whilst stuck in the middle is the failed attempt at both

Question 7

How to value Competitive advantage against competitors

Answer 7

Value creation WTP-SOC

The difference in value between firms is the unique, firm-specific value creation